Nokia Investors Awaiting Payday As Microsoft Deal Nears Completion

Nokia Investors Awaiting Payday As Microsoft Deal Nears Completion
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Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s sale of its handset division to Microsoft Corporation (NASDAQ:MSFT) is almost complete and investors are interested in knowing how much return they will get after the sale completes. Nokia will earn 5.44 billion euros from selling its phone division, which will be concluded this quarter. The additional cash will increase the company’s net cash to 6.4 billion euros, says a report from Bloomberg citing estimates of Deutsche Bank analyst Kai Korschelt.

Analysts expect a dividend

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) may distribute around 3 million euros to the shareholders, as a regular annual dividend in part according to Deutsche Bank AG predicts. Nordea Bank AB notes that the payout by Nokia to the shareholders could be somewhere around 3.7 billion euros, which Nokia would most probably announce in the second quarter.

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According to analysts, Nokia would suffer a loss of 465 million euros, in 2013, but Korschelt noted that a regular annual dividend of 20 cents per share might be given to the shareholders; costing Nokia around 750 million euros. Last year, the Finnish firm did not pay the regular dividend, which left the investors without any dividend from the company for the first time in 143 years. Markus Larsson at Fondita Fund Management Co is estimating a regular dividend of 20 cents; DNB Markets anticipates 30 cents and Swedbank AB 10 cents.

Nokia need to balance growth target and investors demand

Chairman Risto Siilasmaa is determined to strike a balance between shareholder demand for cash rewards with the company growth target. If Nokia freely distributes the cash to shareholders it may result in insufficient funds for investment and takeovers.

“What’s required to run the business should be left in, and the excess must be distributed to shareholders,” said Larsson, who added that it is rational that the balance sheet doesn’t have excessive cash.

Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) would be at risk if it reinstates a regular dividend. Nokia has been assigned Junk rating on its debt by the three main rating companies. It had a net cash balance of 2.4 billion euros at the end of September, and Bloomberg data shows that it has 2.55 billion euros of debt outstanding this year.

Nokia is expected to post its earnings tomorrow. It has already cleared that any extra cash would be distributed amongst the shareholders. However, there has been no word from Nokia over the payment yet.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at
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